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For example, I've heard on this board that a government job that pays $40,000 is really worth the equivalent of an $80,000 salary in the private sector, due to the job security, pension, 457 plan, health insurance, and retiree health insurance (among other benefits) of the government job. Can you quantify these benefits since they are not liquid? Or is it just something that government employees say to feel better about their comparatively lower pay?
State and federal jobs generally have better health insurance plans than private sector jobs. The value of this could be the cost delta between the employer paid premiums, but some healthy people don't value this much.
It's easier to put a value on vacation and sick time, which are frequently more generous for government jobs.
Job security is trickier. Governments still RIF people, albeit more rarely than private sector employers. There are probably stats out there tracking layoff frequency, duration and new salary by industry. You could use this as a factor when comparing jobs.
Pensions are more valuable than 401k in the long run, but only if you vest and retire from the government job, which is tough to predict. A 401k is certainly more portable.
All in all there is some sort of premium that one sound assign to a government job for the reasons, but it would be very difficult to accurately quantify.
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It can vary, because if the agency matches your 401K contribution, then you are getting more benefit than a co-worker who doesn't contribute to one. In the 1980s I was working at a public agency where we budgeted 130% of each employees salary to come up with salary plus benefits. Where I work now, it's about 160%, however most of the increase is due to the cost of medical insurance.
State and federal jobs generally have better health insurance plans than private sector jobs. The value of this could be the cost delta between the employer paid premiums, but some healthy people don't value this much.
It's easier to put a value on vacation and sick time, which are frequently more generous for government jobs.
Job security is trickier. Governments still RIF people, albeit more rarely than private sector employers. There are probably stats out there tracking layoff frequency, duration and new salary by industry. You could use this as a factor when comparing jobs.
Pensions are more valuable than 401k in the long run, but only if you vest and retire from the government job, which is tough to predict. A 401k is certainly more portable.
All in all there is some sort of premium that one sound assign to a government job for the reasons, but it would be very difficult to accurately quantify.
Great post.
I work for local government, and I pay $25/month for all medical/dental benefits (single coverage). That means that my employer's contribution is several times what I pay. I believe they pay over $600/month for medical alone.
For retirement, we offer two plans, a traditional pension and a defined contribution plan. The defined contribution plan is like a 401k, and our company matches dollar for dollar.
New hires receive 25 annual leave days/year, and it increases the longer you are with the company.
All benefits are available from day one, except medical which kicks in after 55 days.
The pay sucks, though. I could easily make more in the private sector. But, union representation and the above benefits are worth staying here.
I don't think that my benefits are worth twice what I make, though. It's difficult to put a dollar amount on security and peace of mind.
Last edited by mochamajesty; 03-24-2015 at 07:26 AM..
I work for state government and my benefits are similar to yours. When doing budget calculations, we work with a 35% salary load for benefits. This includes only hard costs such as FICA, UI, workers comp, retirement, health insurance, etc.
Some of these are variable with wage, being percentage loads such as FICA at 6.2%, and pension contribution of 7%. Others are fixed dollar figures, such as our state workers comp and health insurance, where the employer premium is about $700/month.
The 35% rule of thumb does not include soft costs such as vacation time.
Private companies also pay benefits, although most probably pay less than 35%.
Of course you can quantify it. It's not hard and most people do it all the time. It's called a package. When people move to a different position, they consider the entire package of the offer rather than just the salary. Quantifying it to the penny mabe would be difficult but one can absolutely get to a good level of accuracy. List all your current benefits and see how much they cost you or make you. Do the same with another offer. Add up both columns and voila.
The obvious is that you don't quantify benefits you won't use (like a discount on a subway pass if you don't use the subway). And things like job security, amount of learning/experience gained, future prospects of advancement, etc. are of course much less quantifiable with good accuracy. But even those, using some assumptions, one can assign a value to and one can use weights to account for risk and level of accurate predictability. Although it can be done, I personally think it's not a worthwhile exercise and simply put those less tangible things aside for consideration. When I say "aside", I don't mean to suggest that those less tangible things get less priority. Oftentimes, they get just as much if not more.
Most things (even things that seem intangible) are quantifiable. Question is how precise will it be and the answer depends on how accurate your assumptions are.
At year end when we are told what our annual increase will be, if any, we are shown an all-in calculation of salary plus benefits. They quantify everything, except job security, which there is none.
At year end when we are told what our annual increase will be, if any, we are shown an all-in calculation of salary plus benefits. They quantify everything, except job security, which there is none.
Oh yeah, good point. Much of my stuff is quantified on my weekly paycheck. Health Ins costs (how much I pay and how much they pay), life ins costs, donations I make, discount to my public transport pass, all the taxes (itemized), how much was put away towards my retirement (both what came out of my check and what my org contributed), etc.
My earned time isn't quantified on the paycheck but that's easy to do.
Certainly you can quantify some things into a dollar amount. The added benefits have a dollar value, which is published. (For instance, how much money the government pays for health care plans, retirement plans, etc).
Be careful what figures you take from people however, as I find a lot of people over exaggerate the value of benefits at times which a government worker might receive, as well as under state the value of certain private sector benefits. If we are quantifying these kinds of figures, we need to at least be honest with them.
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